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Securities
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June 17, 2024
SEC Alleges Texas Man Offered Virgin Sham $200M 'Lifeline'
Securities regulators sued a venture capitalist and his investment firm in Texas federal court Monday, accusing the firm of making a bogus offer to invest $200 million into Virgin Orbit last year despite having less than $1 in its bank account and causing stock prices to swell before plummeting when the deal collapsed.
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June 17, 2024
DOJ Wants 15 Years For Outcome CEO's $1B Fraud
Federal prosecutors said former Outcome Health CEO Rishi Shah should serve 15 years in prison while Outcome's co-founder and ex-financial chief each serve 10 years following their convictions for running a $1 billion fraud that affected lenders, investors and clients.
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June 17, 2024
SEC Fines Unlicensed Brokers $2.7M In Microcap Stock Case
The U.S. Securities and Exchange Commission ordered two unlicensed brokers, including one from Florida, to collectively pay a $2.7 million fine for allegedly scamming elderly people into buying microcap shares in companies and lying that the stock was being offered to them at a discount.
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June 17, 2024
Ex-Stimwave CEO Gets 6 Years For Dummy Implant Scheme
The founder and former CEO of Stimwave Technologies was sentenced to six years in prison Monday after tearfully proclaiming her innocence to healthcare fraud charges, with a Manhattan federal judge saying it's "sad" the defendant doesn't recognize the harm she inflicted by selling nonfunctional pain management device components.
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June 17, 2024
Exxon Investor Deal Ends Suit Over Emissions Proposal
Activist investor Arjuna Capital has escaped Exxon Mobil Corp.'s lawsuit over a contentious greenhouse gas-related shareholder proposal the investor sought to include in the company's 2024 proxy statement after a Texas federal judge on Monday accepted the investor's promises not to resubmit the proposal.
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June 17, 2024
Ginnie Mae, HUD Want Bank's Loan Lien Suit Sent To Dallas
The U.S. Department of Housing and Urban Development and Ginnie Mae pushed for the transfer of Texas Capital Bank's suit in Texas federal court over a vacated loan lien, arguing that the bank is contractually required to file its suit in a different division within the same district.
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June 17, 2024
SEC Says Ripple's Remedies Not Comparable To Terraform's
The U.S. Securities and Exchange Commission fired back at blockchain firm Ripple Labs' claims that a recent settlement with Terraform Labs supports a lower penalty amount, saying it can't be a direct comparison given Terraform is in bankruptcy and has made significant concessions Ripple hasn't.
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June 17, 2024
No Coverage For Family Shareholder Row, 2nd Circ. Affirms
A Liberty Mutual unit had no duty to defend Paraco Gas Corp. and two of its executives in a family shareholder dispute, the Second Circuit affirmed Monday, finding that all claims in the underlying suit fell within the policy's contract exclusion.
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June 17, 2024
FTX, Customers Lay Claim To SBF's $11B Forfeiture Tab
FTX told the New York federal court that hit the company's founder Sam Bankman-Fried with a 25-year prison sentence and an $11 billion forfeiture order that the now-defunct cryptocurrency exchange has a right to those funds, while a group of its former clients asserted a similar claim for itself.
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June 17, 2024
Crypto Trading Firm Nabs NY BitLicense
Crypto trading firm and liquidity provider Cumberland DRW announced Monday that the New York Department of Financial Services has granted it a BitLicense, which allows it to operate a crypto business within the state.
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June 17, 2024
Foreign Investors Sue Over Lost $7.7M NYC Mall Investment
Fourteen foreign investors who lost the entirety of their $7.7 million investment in a New York City shopping mall project filed suit against two lenders, a developer and the manager of an EB-5 lender in New York federal court, saying they are owed damages.
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June 17, 2024
CFTC Fines Trafigura $55M In Novel Whistleblower Action
The U.S. Commodity Futures Trading Commission announced a first-of-its-kind settlement Monday with Trafigura Trading LLC, which agreed to pay a $55 million penalty over allegations that it manipulated oil derivatives prices while discouraging employees from reporting potentially illegal activity.
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June 17, 2024
Hertz Warrant Holder Sues In Chancery For Contract Breach
Two investment affiliates of Discovery Capital Management LP have sued Hertz Global Holdings Inc. in Delaware's Court of Chancery, alleging willful failure to redeem warrants issued in 2021 as part of the company's Chapter 11 and demanding at least $187 million plus interest.
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June 17, 2024
Catching Up With Delaware's Chancery Court
Proposed amendments to Delaware's General Corporation Law that were prompted by several recent Chancery Court rulings sailed through the state Senate last week despite loud opposition from corporate law professors and other Chancery Court watchers, and Tesla shareholders filed two new suits against CEO Elon Musk.
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June 17, 2024
Feds Take Hard Line On Tycoon's Pilots After He Goes Free
Manhattan federal prosecutors asked a sentencing judge to consider aggravating circumstances for two pilots who allegedly traded on stock tips from U.K. billionaire Joe Lewis, despite not seeking a prison term for the private equity honcho and former soccer club owner.
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June 17, 2024
SEC Head Of Crypto Assets And Cyber Unit Departs Agency
The head of the U.S. Securities and Exchange Commission's crypto and cyber enforcement team said Monday that he has left the agency after nearly nine years.
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June 17, 2024
Justices To Hear Nvidia Case On Securities Pleading Standard
The U.S. Supreme Court on Monday agreed to hear an appeal of a Ninth Circuit ruling that revived investors' claims over chipmaker Nvidia's crypto mining sales, giving the high court a chance to weigh in on the pleading requirements needed to sustain a shareholder class action.
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June 14, 2024
Ozy Trial Gets Heated, Exec Tells Of Lies, Google CEO Pops In
Courtroom tempers flared, Alphabet and Google CEO Sundar Pichai dropped by and a former Ozy Media executive on Friday told the jury weighing fraud charges against the startup's charismatic founder Carlos Watson of how they nearly conned Buzzfeed into buying the company by faking its financials.
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June 14, 2024
2nd Circ. Releases Citi From Order To Freeze Assets In Gabon
The Second Circuit vacated a protective injunction requiring Citibank to freeze more than $151 million at its Gabon branch amid a shareholder battle for control of a Cameroonian oil pipeline company, saying the New York district court exceeded its jurisdiction by ordering the freeze.
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June 14, 2024
Global Payments Inks $3.6M Deal Over Fee Disclosure Fallout
Atlanta-based payment tech company Global Payments Inc. has agreed to pay $3.6 million as part of a deal to resolve a proposed investor class action tied to allegations that its summer camp payment processor subsidiary allegedly "tricked" consumers into signing up for a program that had fees it didn't properly disclose.
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June 14, 2024
SEC Fines Pa. Adviser In Marketing Rule Action
A Pennsylvania investment adviser has agreed to pay $100,000 as part of an agreement to resolve U.S. Securities and Exchange Commission allegations it broke the regulator's rules barring misleading advertising about fund performance.
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June 14, 2024
Potato Co.'s Software Rollout Fried Its Revenue, Suit Says
Potato product manufacturer Lamb Weston has been hit with a proposed shareholder class action in Idaho federal court alleging that it concealed from investors information about the botched implementation of software that had been intended to improve the efficiency of the company's operations but ended up costing the company millions in lost sales.
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June 14, 2024
Judge Declines To Decide Whether Gemini Misled CFTC
A Manhattan federal judge declined to decide whether crypto exchange Gemini is responsible for alleged misstatements made to the U.S. Commodity Futures Trading Commission through the listing exchange of a proposed bitcoin futures contract.
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June 14, 2024
Elon Musk's Court Cases Remain A Live Issue In Delaware
Delaware's courts will continue to assert control over a multibillion-dollar Tesla Inc. legal fee dispute despite the company's rushed effort to reincorporate in Texas and potentially put CEO Elon Musk's massive, multiyear compensation plan beyond the state's reach, those familiar with the case said Friday.
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June 14, 2024
SEC Says Bahamas Firm Was Set Up To Skirt Day Trading Rules
The U.S. Securities and Exchange Commission opened its case Friday against high-frequency trading expert — and former government informant — Guy Gentile, telling jurors in Florida federal court that he set up a broker-dealer in the Bahamas specifically to evade U.S. day trading regulations designed to protect American investors.
Expert Analysis
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Think Like A Lawyer: Forget Everything You Know About IRAC
The mode of legal reasoning most students learn in law school, often called “Issue, Rule, Application, Conclusion,” or IRAC, erroneously frames analysis as a separate, discrete step, resulting in disorganized briefs and untold obfuscation — but the fix is pretty simple, says Luke Andrews at Poole Huffman.
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The Corporate Transparency Act Isn't Dead Yet
After an Alabama federal court's ruling last week rendering the Corporate Transparency Act unconstitutional, changes to the law may ultimately be required, but ongoing compliance is still the best course of action for most, says George Singer at Holland & Hart.
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How Advance Notice Bylaws Are Faring In Del. Courts
Recent decisions make it clear that the Delaware Chancery Court is carefully reviewing public companies' amended advance notice bylaws in order to balance the competing interests of boards and shareholders, and will likely strike down bylaws that improperly interfere with stockholder franchises, say attorneys at Olshan Frome.
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Employers, Prep For Shorter Stock Awards Settlement Cycle
Companies that provide equity compensation in the form of publicly traded stock will soon have one less day to complete such transactions under U.S. Securities and Exchange Commission and Nasdaq rules — so employers should implement expedited equity compensation stock settlement and payroll tax deposit procedures now, say attorneys at Morgan Lewis.
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New FinCEN Guide Provides Useful BOI Context For Banks
Financial institutions should review a new Financial Crimes Enforcement Network compliance guide for helpful details about how the agency's beneficial ownership information database should be used, though questions remain about the access rule and whether it will truly streamline bank borrowers' Corporate Transparency Act due diligence, says George Singer at Holland & Hart.
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Strategies For Single-Member Special Litigation Committees
The Delaware Supreme Court's recent order in the Baker Hughes derivative litigation allowing testimony from a single-member special litigation committee highlights the fact that, while single-member SLCs are subject to heightened scrutiny, they can also provide unique opportunities, says Josh Bloom at MoloLamken.
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Lessons For D&O Policyholders From Pharma Co. Ruling
A California federal court's recent decision in AmTrust v. 180 Life Sciences, requiring insurers to advance defense costs for a potentially covered claim, provides a valuable road map for directors and officers insurance policyholders, rebutting the common presumption that a D&O insurer's duty to advance costs is more limited than under other policies, say attorneys at Pasich.
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How Firms Can Ensure Associate Gender Parity Lasts
Among associates, women now outnumber men for the first time, but progress toward gender equality at the top of the legal profession remains glacially slow, and firms must implement time-tested solutions to ensure associates’ gender parity lasts throughout their careers, say Kelly Culhane and Nicole Joseph at Culhane Meadows.
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7 Common Myths About Lateral Partner Moves
As lateral recruiting remains a key factor for law firm growth, partners considering a lateral move should be aware of a few commonly held myths — some of which contain a kernel of truth, and some of which are flat out wrong, says Dave Maurer at Major Lindsey.
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Basics Of Bank Regulators' Push For Discount Window Use
As the Federal Reserve and Office of the Comptroller of the Currency emphasize short-term liquidity risk management as central to preventing spring 2023-style bank collapses, banks should carefully tune into regulators’ remarks encouraging use of the Fed’s discount window, which some policymakers identify as a key component in the evolution of liquidity regulation and backstop lending, say attorneys at Arnold & Porter.
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How Broker-Dealers Can Prepare For New Remote Work Rules
Securities regulators recently expanded broker-dealers' ability to permit flexible remote working arrangements through the introduction of residential supervisory locations, a welcome change that better allows broker-dealers to attract and retain talent, say attorneys at King & Spalding.
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Series
Cheering In The NFL Makes Me A Better Lawyer
Balancing my time between a BigLaw career and my role as an NFL cheerleader has taught me that pursuing your passions outside of work is not a distraction, but rather an opportunity to harness important skills that can positively affect how you approach work and view success in your career, says Rachel Schuster at Sheppard Mullin.
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Considerations For Disclosing AI Use In SEC Filings
Recent remarks from U.S. Securities and Exchange Commission Chair Gary Gensler should be heard as a clarion call for public companies to disclose artificial intelligence use, with four takeaways on what companies should disclose, says Richard Hong at Morrison Cohen.
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Unpacking The New Russia Sanctions And Export Controls
Although geographically broad new prohibitions the U.S., U.K. and EU issued last week are somewhat underwhelming in their efforts to target third-country facilitators of Russia sanctions evasion, companies with exposure to noncompliant jurisdictions should pay close attention to their potential impacts, say attorneys at Shearman.
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Args In APA Case Amplify Justices' Focus On Agency Power
In arguments last week in Corner Post v. Federal Reserve, the U.S. Supreme Court justices paid particular importance to the possible ripple effects of their decision, which will address when a facial challenge to long-standing federal rules under the Administrative Procedure Act first accrues and could thus unleash a flood of new lawsuits, say attorneys at Snell & Wilmer.